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How to Start a Daycare Business With No Money

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How to start a Daycare business with no money

Starting a day care with no money can be harder than you think. All daycares need to be licensed, registered with the state and have insurance. In this guide on how to start a daycare business with no money, I will show you how to set up your daycare and get it started all with no money out of you own pocket. 

how to start a daycare business with no money

A daycare can be a great way to provide child care for families in your community. It can also be a rewarding and challenging business venture. When done correctly, starting a daycare can provide you with a steady income and the satisfaction of knowing you are helping to care for children.  If you are willing to put in the work, starting a daycare can be a rewarding experience.

Statistics show that over 25% of preschool children receive some sort of childcare. This presents a massive opportunity for someone who is willing to put in the work and start a daycare business. 

Why start a daycare?

Starting a daycare can be a rewarding way to care for children while also earning a living. It can be a challenging job, but it is also a very rewarding one. There are many reasons why you should start a daycare. 

1. It is a great way to earn a living. You can set your own hours and be your own boss. 

2. It is a great way to care for children. You will have the opportunity to nurture and care for children on a daily basis. 

3. You will have the opportunity to meet other parents who are in the same situation as you and learn from their experiences. 

4. You will be able to provide care for children in your community who may not have access to quality child care. Starting a daycare is a great way to make a difference in your community and in the lives of children.

How to start a daycare business with no money

Can you start a daycare with no money? I know this sounds impossible but hear me out. It is possible, there are a lot grants available for someone who wants to start their own daycare and the funding options are almost limitless if you use your imagination. 

What is the average cost to start a daycare?

The average cost to start a daycare can be anywhere from $5,000.00 to $50,000.00 depending on the state you live in and whether you are home-based or leasing a separate facility for your daycare center. Now most people are not going to have $50,000.00 laying around in their bank account just waiting to start up a daycare center. This is where your creativity comes in. Its okay to start small and grow as you take on more and more paying clients. 

What are the requirements to starting a daycare?

1. Licensing

 Before you can open your doors for business, you need to obtain a license from your state. The process of obtaining a license can vary from state to state, but there are some general requirements that all states have in place. For example, most states require daycare providers to have a certain amount of training in early childhood development and first aid. In addition, daycare facilities must meet strict safety standards in order to protect the children in their care. 

Once you have met all of the necessary requirements, you will be able to apply for a license from your state’s licensing board. After your application has been approved, you will be able to officially open your daycare and begin caring for children.

A good resource is going to be your city or states department of children and family services also known as DCFS. They will be able to provide you with all the local and state mandated training and licensing requirement needed to open a daycare. 

2. Early Childhood Education Classes 

Many daycare providers choose to take early childhood education classes in order to improve the quality of care they provide for their young charges. These classes can cover a variety of topics, from child development and learning styles to effective classroom management techniques. By becoming more knowledgeable about child development and early education, daycare providers can create a more stimulating and enriching environment for the children in their care. Additionally, taking early childhood education classes can also help daycare providers to better understand the needs of each individual child, and how to best meet those needs. As a result, taking early childhood education classes can be a very beneficial investment for both daycare providers and the children they care for.


3. Facility 

There are a number of different facility options for daycare. Depending on the size and needs of your operation, you may opt for a stand-alone facility, or you may choose to lease space within an existing child care center. If you have the budget for it, a stand-alone facility offers the most flexibility in terms of design and layout. However, leasing space within an existing child care center can also be a cost-effective option, especially if you’re able to take advantage of existing infrastructure and amenities. Whichever option you choose, be sure to consider the needs of your staff and families when making your decision.


4. Business insurance

Child care facilities are vital to many families, providing a safe and nurturing environment for children while their parents are at work. However, running a daycare center can be a risky business, as accidents can happen at any time. That’s why it’s important to have the right insurance in place. Business insurance for daycare centers can help to protect against a range of risks, including liability for injury or property damage, loss of income due to closure, and more.
 In addition, insurance can provide peace of mind for both parents and providers, knowing that everyone is covered in the event of an accident. 
When choosing an insurance policy, be sure to work with a reputable company that specializes in child care facilities. This will ensure that you have the coverage you need to protect your business.

Financing options for daycare businesses

There are lots of financing options for daycares here a just few options. 

SBA 7a loans

The 7(a) Loan Program is the Small Business Administration’s most popular loan program. Loans of up to $5 million are available, with low interest rates and repayment periods of 10 to 25 years. The funds may be used for working capital, real estate, equipment, or even refinancing certain debts. There are other loans under the 7(a) program umbrella that go up to $350,000; specifically  7(a) Small Loans and 7(a) Express loans. Some lenders make SBA loans to startup businesses, but many prefer to work with established businesses. The 7(a) Loan Program has helped countless small businesses get off the ground and grow into thriving enterprises. If you’re thinking of starting a small business, be sure to investigate whether an SBA loan might be right for you.

SBA 504 Loans

For businesses in the early stages of development, access to capital can be a major challenge. Thankfully, there are a number of loan programs specifically designed to help businesses in the childcare industry. One such program is the Community Development Block Grant (CDBG) Daycare Facilities Loan Program. This program provides loans to help daycare businesses acquire or expand their facilities, including costs associated with acquiring or renovating a facility or purchasing equipment such as playground or classroom equipment. Loans are typically for 50% of the project cost, with the business owner contributing 10% and the remaining 40% coming from a Community Development Corporation (CDC). However, new businesses may have to contribute more toward the project cost. Regardless, this loan program can be a helpful way for daycare businesses to access the capital they need to grow and thrive.

SBA microloans (good option)

The Small Business Administration’s Microloan Program provides very small loans, averaging around $14,000, to small businesses and non-profit child care centers. Interest rates on the loans are capped at eight percent, making the Microloan Program an affordable option for businesses who might not qualify for a traditional loan. The Microloan Program is also a good option for younger businesses or businesses with less than perfect credit. Participating lenders are typically Community Development Financial Institutions, which are non-profit organizations that are experienced in making small business loans. Because the average loan amount is relatively small, the Microloan Program may be most appropriate for home-based daycare businesses; however, that is not a requirement. If you are interested in applying for a Microloan, you should contact a participating lender in your area to learn more about their requirements and process.

Business credit cards

While business credit cards do tend to have higher interest rates than personal credit cards, one advantage they offer is that you only pay interest on the amount of money you actually borrow–unlike with a personal credit card, where you are charged interest on your entire credit limit, regardless of how much you actually use. This can make business credit cards a more affordable option when you unexpectedly need to make a large purchase. In addition, business credit cards can help you build business credit, which can be essential for making future large purchases–such as leasing office space or buying new equipment. So while there are some potential drawbacks to using a business credit card, there are also some significant advantages that can make them a valuable tool for child care providers.

Community Financing (better option)

Most community have business that parent work at that need daycare services. Each one of these businesses lose money when a employee can not come into work because they can not find daycare. 

One option is to approach these business for a loan and make a deal with them that you will leave so many spots open for only their employees in exchange for a small start up loan. I have heard of businesses in my community loaning out up $50,000.00 dollars and the daycares do not have to pay it back as long as all terms are met for a certain period of time. 

Self Financed (best option)

I like the self financed option the best because it gives you the chance to start off small and get your systems and policies in place before expanding and taking on lots of debt. 

Here is how I would self finance a daycare. I would start advertising and letting everyone know that I am starting a daycare. I would give new clients a discount if they paid for a certain amount in advance or even make it mandatory if you have enough demand. I like 6 month increments with a mandatory number of days each week. 

You can take the money that is a down payment and start setting up your daycare. If you are based out of your home you can make this money take care of all your start up costs and get your business up and running fast. 3

Things to keep in mind – This money is not yours, it is to take care of the child that is entrusted to your care. You cannot spend all the money and then halfway through the 6 months realize that you are not going to make. 

You need a really good budget. You should know your expenses down to the last penny for each day, each week, each month per a child. If you have this down you will not have to worry about running out of money.

Make sure you have a contingency built into your budget of at least 10%. Say gas prices go up or the home heating and cooling bill skyrockets. You need to be prepared for these because asking for more money is not going to go over well.

How to apply for funding


Most lenders are going to focus on three things when considering the loan. Revenues, credit, and time in business. 

Frequently asked questions

Can you start a daycare from home?

You can start a daycare from home if you city and state allows it. Most local townships allow you to start a daycare from home as long as you meet specific requirement. You will need to make sure that your home is safe and clean for the children in your care. You will also need to create a space that is specifically for daycare, which may mean making some changes to your home. In addition, you will need to obtain the proper licenses and insurance.

is a daycare business profitable?

According to a report by the National Association for the Self-Employed, over 60% of American families have both parents working. This leaves little time for children, which is where daycare comes in. Daycare businesses can be incredibly profitable, as there is a constant demand for quality child care. However, starting a daycare can be a daunting task. There are a number of regulations that must be met in order to operate legally, and it is important to find a location that is convenient for parents. Additionally, daycare businesses require a significant amount of start-up capital in order to purchase supplies and hire staff. However, with careful planning and execution, a daycare business can be a rewarding and profitable endeavor.

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